Compliance Assessment Summary Report: K'ai Taillé Market Ltd.
For Funding Agreement no. 1819-HQ-000005 and funding agreement no. 1920-HQ-000035 between Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) and K'ai Taillé Market Ltd
Name: K'ai Taillé Market Ltd
Location: desk audit
Time period covered by audit: April 1, 2018 until March 31, 2021
Total amount of CIRNAC funding received from 2018 to 2021: $1,225,476
At the request of the Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC), Samson & Associés CPA / Consultation Inc. performed a desk compliance assessment of the Funding Agreement between Nutrition North Canada (NNC or the 'Program') and K'ai Taillé Market Ltd (Recipient). Nutrition North Canada is a Government of Canada Program that helps make nutritious food and some essential items more affordable and more accessible to northern communities. The purpose of the assessment, in accordance with our engagement with NNC, was to provide information on:
- Whether the Recipient is passing on the full value of the subsidy to consumers;
- Whether the amounts disbursed to the Recipient through the fiscal years 2018/2019 through 2020/2021 were appropriately claimed in compliance with the Terms and Conditions of the Recipient's Funding Agreement;
- Whether program visibility requirements are met and that the subsidy is transparent to consumers;
- The Recipient's reporting and claiming systems and procedures with regard to gaps and controls issues; and
- Whether the Recipient respected program rules in regard to sales to ineligible clients.
The period covered by the compliance assessment is from April 1, 2018 until March 31, 2021. We determined our sample size by applying professional judgement based on the frequency of claims and the number of items in each claim.
Due to the Covid-19 travel restrictions, no on-site was performed and our compliance assessment was performed as a desk audit. As a result, our interviews were performed based on electronic communication with the Recipient to identify and document their key control activities, their procedures and processes related to the claim of funds to NNC, program delivery and reporting. In addition, due to the travel restriction we were unable to verify the accuracy of the weighting system used by the Recipient.
We subsequently performed detailed audit procedures on the accuracy and validity of the Recipient's claims and on the margin earned by the Recipient on the subsidized products.
Based on the procedures performed and as more fully described in our report, we did not find any significant deviations in the samples we selected; however, we identified improvements in the form of recommendations to improve the Recipient's control environment in relation to the Program.
Overall, we are of the opinion that the funding provided to the Recipient was spent for the intended purposes and in compliance with the terms and conditions for the 2018-19 to 2020-21 Funding Agreements signed with the Department.
- The amounts disbursed to the Recipient over three fiscal years (2018/19 – 2020/21) were appropriately claimed in compliance with the terms and conditions of the Recipient's Funding Agreement.
- The Recipient is not adhering to and is in compliance with the visibility requirements detailed in the Recipient Program Manual. In addition, in relation to Objective #2 a), there was no requirement for the monthly food price reports to be presented to NNC.
- Based on discussions with the Recipient, they are aware of the requirements preventing the sale of subsidized product to ineligible businesses and establishments and the review did not find any sales to ineligible businesses.
- The Recipient is using the most effective and cost-effective supply chain arrangements and routes;
- Subject to the limitations as described in this audit2, in our opinion the Recipient passed on the subsidy to eligible clients and the value of the subsidy is not being eroded by the Recipient's profit margin practices.
- Four recommendations were identified to improve the Recipient's management systems, processes and practices that would address the deficiencies noted.
The table below summarizes the recommendations identified by the auditor, the actioned measures required to be undertaken by the retailer/supplier, and their status.
|Auditors Recommendation for K'ai Tailé Market Ltd.||K'ai Tailé Market Ltd. Action Plan||Status|
|The Recipient should ensure that an appropriate review process is performed of the itemized Shipment Report prior to its submission for payment.||After the review of the management letter, the Recipient engaged a third-party coding expert to assist them in automating their reporting standards and execution. This was developed over the winter and now items are digitally coded based on shipment reports, this is now an automated process vs manual so integrity of submissions should be much improved going forward.||Complete|
|The Recipient should ensure that all the claims are submitted on the set date established by the Contribution Agreement.||After the review of the management letter, the Recipient as indicated that with the recommendations response of the recommendation #1 they will see 99% on time.||Complete|
|The Recipient should ensure it complies with the Nutrition North Canada Program – National Manual for Program Recipients as it relates to program visibility for Northern Retailers.||After the review of the management letter, the Recipient received new posters and shelf labels that they will be placing up in their store as soon as their seasonal realigns in the aisles are completed due to being in the midst of remerchandising store. The Recipient will send image once completed.||Complete|
|The Recipient should ensure it complies with the Nutrition North Canada Program – National Manual for Program Recipients as it relates to program visibility for Northern Retailers by modifying its cash receipt to ensure the contributions are clearly identified as NNC savings.||After the review of the management letter, the Recipient has worked with their POS provider over the winter to update POS receipts—which now correctly states NNC savings at top, NNC cumulative savings at bottom and subsidy levels for each tier.||Complete|
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